GENERAL KNOWLEDGE

Detailed explanation-1: -If the number is equal to 1, elasticity of demand is unitary. In other words, quantity changes at the same rate as price. Elasticity of demand is illustrated in Figure 1. Note that a change in price results in a large change in quantity demanded.

Detailed explanation-2: -The demand for a good is unitary elastic if a change in the price of that good causes an equal change in quantity demanded. In other words, the elasticity coefficient is equal to 1.

Detailed explanation-3: -Key Takeaways If a good’s price elasticity is 0 (no amount of price change produces a change in demand), it is perfectly inelastic. If price elasticity is exactly 1 (price change leads to an equal percentage change in demand), it is known as unitary elasticity.

Detailed explanation-4: -When the elasticity of demand is unity, the Marginal revenue is zero. Thus because of marginal revenue which is zero, the elasticity of demand is one, this means the proportionate change in quantity demand is equal to the proportionate change in price.

Detailed explanation-5: -The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the quotient is greater than or equal to one, the demand is considered to be elastic.